Planetary Regeneration Podcast | Episode 9: Neal Spackman
This blog is a transcription of the ninth episode of the Planetary Regeneration Podcast, hosted by Regen Network’s Chief Regeneration Officer, Gregory Landua.
In this episode, Gregory interviews Neal Spackman, Co-founder and CEO of Regenerative Resources Co. Listen on Soundcloud, Apple Podcasts, or Spotify; or read the transcription below.
Gregory: Hello and welcome to the Planetary Regeneration Podcast. I’m your host Gregory Landua.
Hello and welcome to episode nine of the Planetary Regeneration Podcast with your host Gregory Landua. This episode is with my friend Neal Spackman, who has done some amazing work around the world greening deserts, is an entrepreneur, a recent graduate of the Stanford Business School. You may know his work at the Al Baydha Project in Saudi Arabia where he worked to re-green and regenerate a watershed in one of the most arid parts of the world to provide a rural livelihood for nomads who are no longer nomadic. We had a great conversation, really getting at the intersection of what it takes and why it’s necessary to reinvent the economics of land use and agriculture to create rural livelihoods that are aligned with long-term regeneration. I hope you have as much fun listening to this as I had, having the podcast conversation with Neal. I look forward to your comments.
Gregory: Neal, welcome to the Planetary Regeneration Podcast. I can’t think of anyone better to be on the show. I’m sorry… It sounds like you had a rough night or early morning. I’m grateful to get a chance to chat.
Neal: Thanks. I’m happy to be on. How many of these have you done?
Gregory: We’re like six episodes… Well I’m actually eight episodes in but I’ve released six I think. The beginning ark has mostly been focused on blockchain technology, decentralized finance, mechanism design, crypto-economics and stuff. Now, I’m starting an ark back through regenerative enterprise, regenerative ag land stewardship and the economics of ecological regeneration itself. In that light, I’m very excited to be chatting with you, because you’ve done a lot of great work in the space.
A lot of my audience, at least at this stage, is actually going to be coming from this crypto space. It would probably be useful for them, for you to do a little bit of broad framing about your prior work and just context the ecological and economic potential of dryland landscapes.
Neal: Let’s start in 2010. In 2010, I quit my office job to join the Al Baydha Project as one of the co-founding members. The Al Baydha Project is a comprehensive development program, south of Mecca, in Saudi Arabia. I worked primarily with two tribes, lived and worked with two tribes of settled nomads, where my job was to design and build essentially a prototype for what could be a new economic base that capitalized on people’s heritage as herders and nomads and that was sustainable. We were thinking of it as sustainable at the time. I was really interested in this kind of thing. I didn’t have any experience. I had book knowledge. Sustainable food systems, ecological health, water, and land have been a passion of mine for a number of years, but I never had a chance to really work in it. This was a chance to really try something audacious and see if we could reverse 60 years of desertification in an extreme climate. We have reached about 60 mm of rainfall a year and hit 50°C for a good month. Usually it’s end of July, early August. That’s like 127° Fahrenheit.
Gregory: That’s crazy.
Neal: I was kind of plopped in this desert with these Arab, Muslim nomadic peoples and I had to figure out how to get them to work with me, and figure out the way to make that land productive again, in a way that wasn’t depleted in water resources or in a way that wasn’t contributing to a long-standing trend of deforestation and desertification there. I was their managing director until the middle of 2018. We had a successful run on a 100-acre prototype where we did successfully convert a very small watershed into something more akin to savannah ecology than a desert one. It’s there. It’s alive. It’s gone up to 2.5 years with no rainfall, no water whatsoever, and surviving still.
Right now the Al Baydha Project is stuck in some politics with respect to a lot of things. In 2016, we were near the national housing development prototype, the administrative housing. They’re building a 220-unit housing complex for people who have been living out there in really, really poor housing conditions. There’s been a lot of infrastructure work due to the project. We got a police station there and an ambulance. Now, people have access to emergency services. The cell phone tower they got put up was as a result of our project. We’ve dealt with infrastructure, public health, education, government services, but my particular role was as the representative on the ground of the project and the designer and developer of how to recreate a sustainable economy in this place that increases the biological capital, the hydrological capital of the place. That was up to the middle of 2018. Then, I went and did a year at Stanford, where I studied business. My purpose for that was essentially to say, “Okay, we have this amazing living system that’s come out of a very desolate place. How do we turn it into enterprises?” I think enterprise has to be the vehicle for this kind of work. The scope of the problem is in the trillions of dollars and the scope of charity is in hundreds of billions a year. Charity cannot address the scale of the problem that we’re trying to tackle. We’ve talked about regeneration of ecologies and our [unintelligible 00:09:15] systems. If you can turn it into an enterprise, then you have a financial engine that drives the expansion of your systems and that allows you to have a much broader reach over time. If you’re in NGO or a nonprofit, so much of the energy of a nonprofit is devoted to getting the funding for the next project. I like the system of using enterprise, using businesses as a vehicle.
[00:10:00]
Gregory: Yes, definitely. What emerges when you say that is — just to touch on briefly in the discussion — what about government? Enterprise and government obviously are both the two big drivers in the global economy. From your perspective on the ground and your philosophy in life, does government have or have not in building the regenerative economy of the future?
Neal: I think it depends on which government you’re talking about. In Saudi Arabia, you just got to get into a room with one guy who has the power to make things happen. If you can convince him to take the right steps, you’re solid. It’s much easier to do this in a monarchy than in a democracy. I actually did consider going into government back when I was down in Saudi Arabia and here in the US. I just think that the amount of stagnation and the inability of many governments to get things done when you’re talking about nation-states like the US. I said, “Well, am I more likely to get policy changes done or am I more likely to create a successful business?” You know that acre by acre is going to be making a difference, and I picked the second. I think it really does depend on the government. I don’t have much faith in governments. I think governments tend to be a lagging institution rather than entrepreneurial and innovating institution. Governments tend to follow rather than lead. They pick who they follow. Of course, there are exceptions. There’s national funding for all sorts of innovations generally, in technology than anything else. I looked at them and thought, “Okay, well, am I more likely to be a successful businessman than to be a successful politician?”
Gregory: Right. There’s a couple of different places where I’m really interested in digging in with you. One is in the global vision of the potential of arid landscapes, because I think so many people probably have a sense of the world’s desert is wasteland essentially and maybe don’t even have a historical context for how they became wastelands and the role of land use, bad land use, in getting there. There’s a bit of context that I imagine is probably useful that, I think, probably underpins your perception of the world and where you see intervention points possible. What is the potential of these arid landscapes that you’ve fallen in love in through this process in Saudi Arabia?
Neal: It’s a love-hate relationship. The potential is enormous because there are naturally occurring deserts where Hadley cells or rain shadows come. The reason that the Sahara exists now is mostly because of Hadley cells and the fact that it’s in the rain shadow of the Atlas in Morocco.
Gregory: Yes, the Atlas. Define Hadley cells.
Neal: A Hadley cell is caused by the tilt of the Earth. We have no influence whatsoever on this pattern, but it means that the equator is the closest part of the globe to the Earth.
Gregory: To the Sun.
Neal: At the equator, you get very strong heat. Yes, to the Sun. At the equator you get a lot of evaporation where you get tons of water and it bringing it to the atmosphere. Then, within 10 to 15 degrees of the equator, you have these very green belts within the tropics. You tend to have very wet tropics. Beyond those 15 degrees, you have very dry air with almost no water in it. You will notice that outside of the tropics, at some point in the middle of the subtropics, you get these belts in desert, both north and south of the equator. You can follow these along on Google Earth or something, where Hadley cells between 15 and 25 degrees is just cause very dry air with very little rainfall. That’s a massive pattern that contributes greatly to the desertification of areas within those latitudes. The last time the Sahara [inaudible] was not a desert, was during the Ice Age when you had giant glaciers across Europe. You would have winds sweep across those glaciers and pick up moisture and then they would dump it into the Sahara along with the water that didn’t pick up in the Mediterranean.
Since the end of the Ice Age, it’s been… Hadley cells are a massive factor in where deserts occur and where they don’t. Most people aren’t really aware of that but it’s a factor. At some level, they don’t care, “Don’t bring the Sahara.” I’d be like, “Wow.” Some things we can influence and some things we can’t. You’ve got lots of other places where desertification has been largely man-made. Here I’m thinking about where I’ve been working in Saudi Arabia. The west coast of Saudi Arabia historically has not been a true desert. It’s been a dryland forest much like [unintelligible 00:16:46] Al Bahah for instance. It’s a dryland forest. Desertification there has been caused by policy changes that eliminated indigenous management systems. Across the whole of Middle East, there’s an indigenous management system called EMA, which essentially means “protected land.” This system pre-dates Islam so it’s functioning for at least 2,000 years. It was a tribal management system that may change the fertility of the landscape. These were largely abolished in the 1950s across the Fertile Crescent and in the Arabian Peninsula. Because of that change in management, the tribal boundaries especially were eradicated. You’ve had a free for all on grazing such that, wherever it rains in the Mecca region for instance, when it rains in Al Bayda we get people from 250, 300 miles away, bringing all of their animals to graze on that land. As soon as the grass is gone, they are out of there. That collapse in the traditional management system led to a tragedy of the commons and that’ what’s been going on for the last 60 years, because the commons essentially was erased.
Gregory: Right, the tragedy of the not commons, basically.
Neal: I think our argument on that is largely semantic more than anything else. That was the dryland forest. I’ve got testimony on YouTube from old men who are walking through this completely desolate landscape and they’re saying, “There used to be so many trees here that you couldn’t see the mountains.” The mountains are only 100 yards away. We can also talk about the Fertile Crescent. The modern day Iraq used to be the most fertile place on the planet. Hundreds of years of irrigation made that land salty. Then, by and large, it hasn’t recovered since. Irrigation was a massive factor in desertification in the Fertile Crescent, in the Mediterranean. With the Maya, it was deforestation that caused massive droughts. There are all these factors where ecological degradation precedes environmental disasters and breakdowns in the traditional societies that in turn worsen the ecological degradation. That’s the short version of what desertification is.
[00:20:00]
Gregory: Right. As you’re sharing that narrative, I’m reminded of Jared Diamond’s book Collapse where he catalogs these different civilizations and their successes or failures in realizing that their internal economic dynamics are creating these massive desertification and degradation events. Some societies realize and adapt. Some societies don’t and die essentially.
Neal: Yes, or move somewhere else.
Gregory: Or move somewhere else.
Neal: I really like Montgomery’s book Dirt. Have you read that one? One of my favorite books because he just so clearly lays out the connection between soil and civilization. You wouldn’t think that Roman military expansionism had something to do with erosion off the top of your head. He pretty clearly shows that it is a factor, maybe not the determining one, but a significant one.
Gregory: Yes, I think that’s basically, in my mind, that intersection between civilization as we know it in Dirt. It’s one of the most pertinent.
Neal: It’s not understood. It’s not understood, not nearly enough. Once you do become aware of it, you start to see it everywhere. Probably some of that from my part is a little bit of a confirmation bias. It’s everywhere. That happens. It’s happening now. It happened dozens of times in the past and it’s hard to communicate. It’s an externality. It’s a result of an externality. All of sudden, it has to be internalized in various severe ways.
Gregory: Let’s talk about that a little bit. By and large, I think, when you and I had in-person conversations about the regenerative enterprise vision. I remember having a couple of conversations with you a little while back when you were working on some visions for sourcing ingredients from regeneratively managed landscapes and arid lands. I myself had done some work on the sourcing side. How do you link the primary productivity of a diversified agro-economic system into the human economy? There’s like a thesis there around regenerative enterprise. Then, also we have alongside of that, there’s what you’re just talking about which is that there’s this massive externalized cost in the agricultural mining of resources, soil degradation, desertification. It’s essentially subsidized. Bad agriculture is massively subsidized both governmentally and officially through policy, but also subsidized by ignorance that leads to really poor price discovery by market dynamics — the externalization of things that shouldn’t be externalized. What’s the relationship between a transformational approach that focuses on an entrepreneurial venture of brining novel or higher value decommodified ingredients into the market versus, and/or complemented with, an entrepreneurial approach that tries to, where possible, internalize previously externalized costs? What do you see there at that intersection? Where’s your mind moving right now in the ventures that you’ve got in front of you?
Neal: I see a tremendous amount of opportunity — to be frank — a lot of opportunities that other people don’t see. Part of that involves understanding how to bring degrading landscapes back. Let’s say current trends continue unabated and in 30 years the Ogallala Aquifer is completely depleted, and 80% of the farmers in Nebraska put their land up for sale. That land’s going to be worth nothing because there’s no water.
Gregory: And it’s quite fairly salted too, at that stage, in 30 years.
Neal: It’s a little bit more salinized than it is now. It’s got a long history of pesticides, herbicides, fungicide application on it. Anyone that looks at that land will be like, “This is worthless,” which means if you’re somebody that knows how to bring that back, not just ecologically but to create something productive, it essentially means you can buy low and sell high on that land. That’s an opportunity. That’s actually part of the business model of what, not Nebraska per se, but as part of the business model of the company that I’m running right now, where we are actively seeking extremely distressed, desertified, destroyed landscapes where other people do not see value. That land can be had for cheap. We’re buying it between 300 or 500 dollars an acre. If things work out, within a decade it will be worth 10,000 an acre. We’re taking an asset worth 500 dollars and turning into something worth 10,000 dollars in a decade, with about 4,000 dollars worth of investment. That’s an opportunity.
Another thing I see is that where you can find or pinpoint how externalities are affecting things in other systems, there’s another similar kind of dynamic. Take a fishery of New Orleans in the dead zone for instance. A dead zone is worth nothing. It’s dead. Everything that couldn’t swim away was choked by algae blooms that consumed all the oxygen in the water. There are reports of fishermen who used to catch fish and now they’re only catching jellyfish. If water rights or if fishing rights was geographically set, which they are not — which is why I’m uncomfortable talking about this because it’s hypothetical — I would go buy fishing rights to a zone. Give me 50 years of fishing rights to that dead zone. It will cost million dollars per 50 square kilometers or something because it’s worthless. It’s completely worthless. Then you go upriver and you get a contract for floating wetlands on the Mississippi for instance. Those floating wetlands cost about 4 dollars for a square foot. You can produce flaked corns on them. You can produce rice. You can produce any sort of thing where those things pay for themselves.
The other thing they do is they clean up your dead zone. If you can find places to insert a way to harvest what is otherwise viewed as pollution, that would dramatically flip the value of those fishing rights for once I think. Then you still have a successful business upriver doing floating wetlands. If you understand where the choke points are in that cycle or where the bottleneck is or where the flaws are of, essentially, wasted resources, and to the extent of those wasted resources are damaging something else, then you’ve got a [doofer?] where you can harvest the wasted resources and dramatically increase the value of what they were destroying previously. I don’t know if that’s what you wanted me to go on with that question.
Gregory: That’s fantastic. What I’m hearing you describe in general is a long regeneration investment strategy where you’re buying these currently distressed assets.
[00:30:00]
Neal: You’re flipping them through ecological development.
Gregory: Yes. People do this in real estate all the time. They determine a location that’s currently perceived as undervalued, and they buy up a couple of key properties to develop, and they buy the rest of them up to sell, after whatever that development is, and it increases the value. There’s a pretty clear corollary with more conventional business practices and, in fact, is very much in keeping with a conventional approach to business. The difference is there’s a skillset. There’s a skillset that you have that other people in the permaculture, land restoration, environmental engineering, living machine, John Todd style stuff you’re bringing in with the floating wetlands, there’s a skillset that’s needed to de-risk and, in fact, make that upside come true basically. It’s interesting. I see something very similar. I oftentimes get all excited and tell people, “There may never be another moment in human history where there’s so much amazing density of carbon dioxide in the atmosphere for us to turn into plants.” This is it. This is a gold rush man. Get in now while you can. This is never going to be easier.
Neal: It’s just the question of how you’re harvesting that, and what’s the value that you’re bringing to that? It’s true and the thing is you’ve got to get it out. The other side to it is that there is starting to be an opportunity for payments of ecological services, as you very well know, because that’s the game that you’re playing right now. That’s just a cherry on top for me. I think I’ve got a formidable business plan as is and now you’re telling me, “Oh, if I’m sequestering carbon I can also get paid for that. ”
Gregory: To me, that’s the tipping point. To me, if it looks so stupidly amazing the opportunity to get to build a global landscape restoration and regeneration business movement, but business, if it is so overwhelmingly profitable over the next 10 years for capital to move and deploy as you’ve said a couple of trillion dollars that are needed to really engage meaningfully with this, then it will happen. It will happen. To me, that case really becomes bulletproof when you bring short-term liquidity through the provision of ecosystem services. Otherwise, it’s very long-term. If we can bring liquidity that is directly tied essentially to the success of those upstream mitigation practices or whatever it is, right there, you just bring liquidity right to that moment, the whole thing looks really good from a business perspective.
Neal: Absolutely. That’s what I want to do. That’s what I’m doing right now. I’m focused on coastal deserts and desert landscapes. I’m the CEO of a company called Regenerative Resources Corporation. We incorporated in July. We have Carl Hodges as one of our advisors. He was one of the founders of the Biosphere II, and he came up with the system called The Integrated Seawater Agriculture, which essentially uses seawater to create artificial weapons on the coast and they are ridiculously productive. We also have one of the chief scientists at NASA as one of our advisors. His focus has been on sustainability in land use. We’ve five partners on this. We hope to launch the first regenerative shrimp product in Q1 of 2021.
Gregory: Yes, amazing.
Neal: That’s our first go-to market.
Gregory: Describe to the audience a little bit about what would make a shrimp farm regenerative. Discern between mangrove destruction and the status quo conventional shrimp and the regenerative shrimp vision that you’re moving towards.
Neal: Let me give you the context on the status quo because right now, you can’t eat shrimp. There is some shrimp that is sustainably harvested and then certified, but you’re still taking stuff out of the ocean. That’s not most shrimp. Most shrimp is coming from overstressed fisheries. There’s all sorts of associated damage to the ocean through that whether they’re dredging the ocean floor and destroying the ecology down there or they’re catching tons of by-catch which is fish that you didn’t intend to catch that ends up in your nets anyway or it’s coming from farms in southeast Asia, Indonesia, Thailand, India, where they are destroying mangrove forests to grow the shrimp. The supply chains are extremely dirty and there had even been some report of slave labor being associated with some of these companies. It’s a dirty business either way. What we are doing is we’re doing shrimp aquaculture on a desert coast where there’s nothing living. There’s just completely salinized desert coast and we do shrimp aquaculture. Then we top the effluent thought the constructed wetland. That essentially absorbs the effluent and turns into a mangrove forest. We re-grow mangrove forests on these desert coasts using the shrimp [EB Solvent?]. The really beautiful and elegant part of this is that we manage those mangrove forests to produce 100% of the feed for our aquaculture, because most aquaculture feed is either monocrop soybeans or it’s by-catch.
There’s nothing clean about what most shrimp are eating in aquaculture systems. We are producing 100% of our feed from the mangrove forest that we grow. Then you start off with this desolate desert landscape and you’ve got shrimp tanks on a very, very small percentage of it and the rest gets converted to mangrove forests.
That’s mangrove aqua forestry integrated with shrimp aquaculture to turn desert landscapes into mangroves. I’m so excited to be doing this. I’m so excited. Our first site is in Mexico. It’s about 500 hectares. We have a second site identified in Mexico that’s the size of Manhattan Island where we have a sales contract on that from when we raised the investment to go after something of that size. We have an interest in Somaliland. Essentially, we’ve got a 2,000-hectare prototype in Somaliland where we’ll build an African center for seawater agriculture and other tens of kilometers of coastline that we can expand on to there. Altogether, there’s over 150 million hectares of land where this system is appropriate, around the planet.
Gregory: 150 million hectares.
Neal: Yes. That’s what we’re going after.
Gregory: Can you give me some thoughts on per hectare productivity, both on the sellable private goods but also on the public goods side, carbon and things like this.
Neal: Yes, let’s take that site that’s 8,000 hectares in Mexico. That’s 20,000 acres. We think we’ll be doing between 80 and 120 million in revenues on that site altogether.
[00:40:00]
Gregory: Primarily from shrimp.
Neal: Shrimp. There are a handful of other products that come out of the system. It’s very flexible. If there were, in Somaliland for instance, there’s a three-kilogram crab that lives in mangroves called a mud crab. They only have two tiny pieces of the mangrove along their coastline where these crabs live. They are in endemic to the area. We can put crabs into the system at no cost. It costs us nothing to add those crabs. I think it could become a significant revenue source. There’s other types of aquaculture we can do. We can put tilapia into the seawater system. We can do lobsters. We can do oysters. We can do clams. We can do sea cucumbers. We can do any number of things. The beautiful thing about mangroves — and I can’t find where I saw this statistic but I did see it in like a National Geographic — two-thirds of the world’s ocean species inhabit mangroves during some part of their lifecycle. The number of things that we could do in the given system — assuming that’s appropriate ecologically because we don’t want to import stuff; we want to use native species on this — but given the ecological suitability and the financial suitability, this system is extremely flexible on what we can produce but we’ve chosen shrimp as the primary one that we’re talking about because of market realities in the US and Europe.
Gregory: Right. I’ve got a couple of different questions. One is: how much permeability is there? Is this you’re pumping up on the land and really nothing gets back out to the sea or is there an interface?
Neal: Exactly it. You pump it up out on the land. You have wetlands and lagoons and artificial rivers and all this stuff. Whatever makes it back to the ocean has been filtered by a mangrove forest and it’s going out underground. There is no ocean outlet. We are capturing all the nutrients that we create. They close the loop cycle.
Gregory: What are the carbon numbers?
Neal: We’re continuously pumping. Carbon number on mangroves is 65 tons per acre per year for the first three or four years.
Gregory: Yes, it’s amazing. Then, it stabilizes with a slower increase.
Neal: Yes, but they have found some mangrove forests in Baha, which is a desert. They found teeth 13 feet deep underneath these mangroves. None of the carbon’s in the biomass. It’s a tiny, tiny fraction. All of the carbon’s going into the soil.
Gregory: Yes. Science hasn’t really figured out yet. Our scientific community hasn’t really figured out yet that longer-term organic carbon peak and soil and the deep soil cycle, the liquid carbon cycles and whatnot are all still a little…
Neal: It’s very dynamic. Two of my partners did this system. They did the shrimp system in [inaudible 00:44:10] from 1999 to 2003. If you look on YouTube a video called “draining [unintelligible 00:44:18],” you can find some of the exposition on that site of what they were doing but they had [scripts?] come out and test their soil so the 65-ton number comes to term of what the scripts studied on that site. There is precedent for that that exists within our company. Otherwise, I would be very reluctant to give any kind of number. That number may change depending on where we are. Maybe that was one of the laws in Eritrea but it may be very different in Mexico or Columbia or Australia.
Gregory: What you’re describing is very interesting to me because basically what you’re saying, which I love, is classic entrepreneurism which is — use the gradient. What’s the most distressed possible asset that you could work to bring into a state that is more valuable? People oftentimes think about that in terms of the classic mercantile trader where you’re taking something of low value because it’s overabundant to someplace where it’s of high value because it’s rare. Here, there’s something like that going on, but here what you’re saying is actually, humans can be a force for regeneration while creating the primary productivity needs of our global economy like food, shrimp.
Neal: When I was out in the desert and I was very isolated, we’ve got these two very different happenings, one of which is we’ve got population growth and the need to feed people. Although, I don’t buy into all of the details of that dominant imperative but the factor remains that population’s growing and that population growth is enabled by a food system that is destroying our resource base. If trends continue, we get to a point where… Do we have to pick between preserving the Amazon and Chinese people eating bees because that seems to be the choice right now? There’s got to be a way to solve both of those at the same time even though they are at odds with each other. That’s what I’ve been searching for.
Gregory: I think that that’s right on. I don’t think it’s an either-or at all actually. Then, in that case of the Amazon, at least from my perspective, part of the answer there is providing compensation for the provision of the public good, of the ecosystem service and function that the Amazon provides because that makes that particular ecosystem less financially viable for [unintelligible 00:47:48] and more financially viable for multistrata agroforestry which also, by the way, can produce plenty of food.
Neal: Plenty of food, but it doesn’t mean we have to destroy the forest. That really is the crux of the issue for me, but the only way we’re going to find that is if some… We could mandate it by fiat. It could be a government bond that says that this forest is preserved but as long as that preserved forest is adjacent to world poverty, we’re not going to stop this cycle. This is something that I’m better at putting into words now, but there was something that I realized very quickly. Then, in Al Baydha at my work in Saudi Arabia, deforestation was driven largely by people cutting down wood, cutting down trees. They were just looking for their next meal. They may understand at a very visceral level that cutting down trees is not good for them. In fact, people would say that to me frequently. They would say, “We know this is bad but we have to do it because I’m not in a position to think about the well-being of this land in 10 years. I’ve got to pay for a hospital bill” or “I’ve got to feed my kids tomorrow.” This is a pattern everywhere where ecological degradation, it exacerbates world poverty, but then world poverty becomes a significant driver of that process as people are forced into short-term thinking and forced to extract from that ecology rather than to work with it in order to make ends meet.
[00:50:00]
Neal: That’s another key pillar of our company is that we’re trying to create systems that bind rural prosperity to ecological function with the rural [unintelligible 00:50:18] If I participate in this system, I’m going to be so much better off than if I just cut it all down or re-graze it or plow it or whatever it may be. Deep inside my soul that’s like a driving motivation for me is to reverse that, to show salient examples of how we reverse that trend and reverse that pattern. Then, it doesn’t depend on the government sending military to shoot the poor people who want to cut the trees down. Sometimes people fantasize about this. Let’s just send the US military down to the Amazon and they can protect the forest. It’s not a healthy dream to have. If we can create communities where people see that their prosperity is directly tied to ecology, where ecology and wealth are so directly connected that people can’t deny that that’s what it is. That’s a massive driver in motivation for me.
Gregory: Amen. I resonate with that. Such heated agreement on so many different levels. That is essentially the imperative of the moment.
Neal: Of our generation.
Gregory: Yes, especially in the next 10 years. It’s enormously invigorating and inspiring to me because I think, as you are noting, you start to see opportunities everywhere. There’s an almost overwhelming opportunity because that is the state of the world everywhere. There is a whole planet of opportunity for engaging with this realigning short-term economics with long-term ecological health. That trick. I think there’s a number of different ways to get out of that. I’m very excited about the way that you’re describing. I’m curious, if we were to fast forward 10 years into the future and we were to say that… It’s regenerative resource ventures. Is that the name of the company?
Neal: Regenerative Resources Corporation.
Gregory: Regenerative Resources Corporation is on five continents and has hundreds of thousands of hectares under management.
Neal: Yes, here’s the goal. Do you want to hear it?
Gregory: Yes, let’s hear it.
Neal: We’re going to plant a billion mangroves by 2030 and be a billion-dollar company.
Gregory: Yes, awesome. Okay. You’re a billion-dollar company from a billion mangroves, which I love the connection between, as you were noting, we have to reconnect that value stems from ecological health. That is what generates value. What’s next after that? Where would you mind go? What’s the next opportunity zone that is invigorating? You maybe even started somewhere in the middle but where do you see opportunity? In the sea of overwhelming opportunity, what’s the next one that draws your eye?
Neal: If we’re as successful as I hope, then I think the strategy that’s become a bit more political. I’d love to buy Iowa cornfields and convert them into sellable pastoral system. I don’t think that’s a huge opportunity financially because those lands are expensive because they are propped up by the system that’s propping them up. Who knows where that would be in a decade, but given that in the US all of the presidential candidates have to march to Iowa and talk to about agriculture, I’d love to start converting mono-crop fields into sellable pastoral agroforestry systems. The other big opportunity I see is the ocean itself. Kelp farming, seaweed forestry — the potential that those things have to replace plastics for instance, to replace carbon fuels, to replace so many things that are produced in a detrimental way and are discarded in a detrimental way. That’s what I see. The general model is: find a distressed asset and flip it. That’s where we’re looking.
Gregory: It sounds to me that actually in a way you guys… I don’t know… but it sounds like your business model isn’t even necessarily flipping it. It’s cash-flowing it essentially.
Neal: Cash-flowing it, absolutely. There’s still very much a real estate side to it. There’s a way to internalize that gain in real estate value without giving up management of the land. That’s part of our business model where… You buy 1000 acres and a million [unintelligible 00:56:27] and then in a decade it’s worth 50 million. Even if you want to hang on to it, you can collect 24 million on the majority of it.
Gregory: That leads to another interesting question which is: what are the financial instruments — old or new — that entrepreneurs in this regenerative industry need to be literate about that provide important opportunities?
Neal: There’s a lot of innovation happening here. I’m not up to date on all of them. Depending on what country you’re in, governments may be very, very supportive for entrepreneurial efforts or restoring ecologies. In Mexico for instance, if you put up 20% of the capital, the Mexican central government will put up the other 80% within a planned exit, within 5 to 10 years. That’s one that we’re thinking about where on that 80% we don’t give up any equity. Because Mexico just has that structure in place. Green bonds are another one but I haven’t seen them applied to ecological restoration. There’s all sorts of social capital bonds that are out there but they tend to be more focused on cities. I think that’s starting to change. He’s our mutual friend, Tom.
Gregory: Tom Duncan.
Neal: He started a good thing. Tom Duncan is doing a ton of work on that stuff. In fact, I would ask him that question before I answer you that question. We’re going with the mix of debt, revenue and equity-based capital. We’re fairly convention in that sense, at least on these initial projects that we’re going after.
Gregory: How was the reception? How are investors receiving the pitch?
Neal: The only investors that know about us right now are ones that we’re already are friend with, whether through the network of my partners or through people that I knew at Stanford who took an interest into what I was talking about while I was there. We haven’t gone out of actively done cold pitches to the people that don’t know us yet. I think we actually for our initial projects — not for the big one in Mexico but for our initial projects — I think that that’s going to be fine. I think we’re going to have [inaudible].
[01:00:00]
Neal: It’s people that already understand at least the seawater ag side of what we’re doing and bought into that vision 10, 20 years ago. We have friendly people who believe in the vision and they want to put money up for it. That’s just because I’m lucky to have the partners that I have. I have a fantastic team of guys who… There’s five of us, but three out of the five of us are 70 or older.
Gregory: They are bringing a lot of wisdom to the table and maybe are a little bit more mellow than your regional startup founders. Maybe not.
Neal: Absolutely. They have a tremendous amount of experience and a lot of connections they made over the years. It’s a funny dynamic. I’m the CEO but I’m 38. They’re like… At least one of them is twice as old as I am. I feel like I have three mentors who are coaching me in addition to taking their roles as far as they want to take them. It’s been really, really beautiful actually. It’s been really beautiful. I feel very, very lucky that we found each other and that we decided to go after this.
Gregory: That’s fantastic. I’m excited for a Regenerative Resource Corp.
Neal: Me too.
Gregory: I’m excited. We’ve been scheming a little on the side to see how Regen Network can support in the monitoring, verification and issuance of ecosystem service credits. I’m really excited about that. I am particularly excited that… You represent a buyer class, a user class that, I think, we on our team are really excited about. How do we support, as a business, the investors and entrepreneurs who are focused on landscape-scale regeneration as their business model is something we spend a lot of time thinking about. I think it’s nascent. It’s not yet a market. It’s going to be in the next five years. I’m excited to keep a pulse on it and see where we can support and learn as well. I know you’re a little guy wanting to play.
Neal: We’re doing okay. He’s distracted for now.
Gregory: Okay, good.
Neal: I’m in no physical condition to play right now.
Gregory: Totally. Let’s see. Where could we go here? I’m halfway tempted to circle back around and dig back into this semantic, potentially pedantic, argument around: is this market or commons causing our malaise?
Neal: I don’t think it’s commons causing it. I think commons are the front line where the distraction happens. That’s what it is. Common things in the modern day appear to me to be very fragile because nation states supersede everything so much that they just overrule them by and large. I would like to think there are exceptions to that.
Gregory: I think that’s accurate and so do markets. Not even nation states. Then it gets kind of tangled. I don’t say neoliberal in like I’m spitting it out in hatred, but the neoliberal economic theory that was developed quite successfully and then implemented somewhat covertly and somewhat explicitly everywhere. There is essentially a real core part of that in which there’s the trust in the mystical properties of the ubiquitous market and maybe of ignorance around the role of local commons management. I think there’s something there which is… I’m always trying to push back and say, “Hey look. I think it’s useful to notice that commons actually are a specific anthropological… Using anthropological lands, you can see that there is a social structure that’s called the commons. It gets destroyed and then what is left are these unstewarded common resources. It’s like an act of the enclosure over and over and over again basically, disillusion of the commons.
Neal: That’s right. That’s why I think our difference is likely semantic.
Gregory: I think that’s right and maybe even nonexistent, it seems like. I just shutter. I don’t think it’s useful for our movement specifically or even the larger economic conversation, there’s a certain level of precision that’s needed. When we talk about the tragedy of the commons and Garrett Hardin’s paper on The Tragedy of the Commons — what I just said which you were agreeing with — which is there’s a social construct around stewarding common pool resources and ecological commons that essentially is overlooked and dissolved and destroyed. He didn’t even see that. In his mind, he presented this picture of this abstract nonexistent picture. There’s just like a field and everybody keeps putting cows on it and there’s no such thing like a social contract where I know my neighbors and they know me and we can tell when we overgraze essentially.
Neal: In a tribal society, at least [unintelligible 01:07:45] system, it was strictly enforced. If you agreed at the right place at the wrong time, you were stripped of 10% of your flocks and you’ve got flogged. It was a very strictly enforced system. It’s not that there’s these people that just happened upon a place. This is where we’re using the term differently. It’s when that social structure is absolved, that the tragedy of the commons occurs.
Gregory: Right, the tragedy of the commons is the disillusion of that social structure. Then what happens, I would say, is what we could say it’s the tragedy of the market. Because you have these different forces, there’s interest superseding the proximate stewards. Essentially, you are an asset liquidation event basically that’s unfettered to the basic ecological assets. That’s why I’m like, “No, I think that’s actually… there’s like two steps. First, you have the tragedy of the commons where the commons are destroyed and then you have the tragedy of the market that we don’t internalize these real values and instead liquidate them and boom. It’s gone.
Neal: Then it’s gone.
Gregory: Then it’s gone.
Neal: I’ll bring up the subject that I want to hear what you have to say about it. You and I met at Permaculture Voices 3 in 2014.
Gregory: I think that’s right.
Neal: Five years ago, give or take. It might have been at PV 2. I spoke at PV 2 and PV, 3 but I don’t remember on which event you were at.
[01:10:00]
Neal: At that time, there were a dozen of us that were using the term regenerative agriculture. It was a tiny, tiny thing. There was a Facebook group that Darren ran called Regrarians where that term was used very commonly. It’s been crazy to see in five years how much this term has exploded. It’s exploded. Now, there’s regenerative blockchain which you might know what that means. I have no clue whatsoever what regenerative blockchain might mean. To me, the regenerative part is directly tied to ecosystems and ecologies and water and land. There’s regenerative [coal?] housing. The term has been co-opted. We knew that it would. I remember arguing with you when you guys were doing regenerativeculture.com or whatever it is. What’s that website you guys did?
Gregory: regenerativeagriculturedefinition.com.
Neal: That’s it. We were going back and forth on what that was. General Mills has picked up RegenAG and committed to doing a million acres of regenerative ag, and what that means to them is no-till cover crops. That’s what regenerative ag means to General Mills, which admittedly is a massive improvement on multiple till no-cover crops. It’s an improvement. It doesn’t get to the heart and soul of the issue. It doesn’t get to biodiversity even though they’re going to have much more biodiversity on those farms where they’re doing cover crops and not tilling, primarily in the soil. They’ll have much more biodiversity in the soil. The amphibian population’s not going to go up. The lizard population’s is not going to change. The bird population is not going to change. I’m wondering, A: how do you feel about this explosion and B: what steps would you think that we ought to take as a movement? Do we want to be purist about it and then force and be like, “No, that isn’t it” even if it’s a great improvement, or do we want to welcome this co-option like a marginal step towards what we want to see?
Gregory: That’s a great question. It’s been a crazy ride being part of that whole five-year explosion of regenerative ag onto the scene. If you would ask me this a year ago, I would have been way more triggered about it all. I’ve now made my peace in a way.
Neal: I want to hear about your peace.
Gregory: Yes. In a way, I would say Regen Network is my answer, which is I think ecological state and having all stakeholders, having ubiquitous immediate access to real information about biodiversity, carbon, water outcomes on landscapes everywhere, is my answer because that’s, as you said, regenerative outcomes. To me, cover crops, no-cover crop, tillage, no tillage, whatever — it’s all context-specific. It all has to do with: what’s the potential of the land and how are we stewarding it and developing? Regen Network is our attempt to develop a platform that essentially commodifies the verification and reporting about ecological state so that it is so inexpensive and available that it is just the foundational piece of any conversation anybody has. That’s our hope.
Neal: You bet.
Gregory: I don’t know if that answers your question. Obviously, I have my own opinions that I think I laid out in our levels of regenerative agriculture whitepaper pretty clearly. To me, marching up the orders, you get to where the expression of agriculture as a cultural connection with the greater living biome and what it means to be human and be a keystone species on the planet and all these other ways of holding things, almost as a philosophical or spiritual imperative is what Regen and agriculture means to me. It’s not something that I would be very excited to have someone certify basically. Certifications in it of themselves, I think, are a really, really poor way of outsourcing some sort of missing trust mechanism, which has been eroded in the explosion of the global economy and just the way that the world works in the 21st century. We use certifications because we don’t have small enough social groups to get real information basically, and to hold each other accountable. However, I think, there is a sense that I have that we can recreate through technology a nested system of trust and transparency where you can choose who you’re being transparent with about what, in a way that creates a far higher degree of accountability and serves markets realigning with a more holistic function, where we’re not optimizing for the efficiency of taking advantage of people who don’t have information essentially, which is currently what many markets are optimized for. That’s like a convoluted way of answering, but hopefully, I answered most of the key points there.
Neal: That’s good. You and I are both taking the same approach where we’re like, “Okay, I’m just going to build the thing that I think should be out there, because what else are we going to do?”
Gregory: What else are we going to do? Just build it.
Neal: Yes, let’s build it and the when people see that it can be built, then let the markets follow.
Gregory: Yes, exactly. Build what the market of the future needs, and build what the market of the future needs to be, maybe even more pointedly. Yes. It’s interesting to reflect back on that, us meeting at Permaculture Voices 3 — it was 3, I think — and just where things were at in the world then, and the ark of our respective projects and businesses. Terra Genesis International continues to do some really great work with companies that want to take regenerative or regeneration to the deepest level they can.
Neal: By the way, I have a potential client for you.
Gregory: Awesome.
Neal: We’ll talk about it.
Gregory: Yes, we’ll talk about it offline and we’ll shoot it over to the dudes, Luke and Russell and others, who are really the leaders at Terra Genesis these days. I’m all hands on deck, all immersed in this infrastructure play, this digital infrastructure play. I never thought that my answer to how to create a regenerative economy — if you would have asked me in 2014 I never would have answered — applied cryptography is the answer.
Neal: I need to build a digital platform.
Gregory: Never would have through, but here we are.
Neal: Here we are.
Gregory: Cool. It’s been fantastic to catch up Neal. I’ve had a lot of fun.
Neal: Me too Greg.
Gregory: Do you want to share any parting resources or web pages or anything for people that are interested and want to follow your work?
Neal: Oh goodness. We’re building our website right now for Regenerative Resources, but I tend to send people to my webinar series which is Sustainable Design Masterclass on Youtube. There’s 200 hours of webinars with some really heroic people doing phenomenal work. I’m on Facebook a lot, probably more than I should be, where I run a Dryland Restoration page and I post there pretty regularly on what I’m about. I’m not on Instagram. I’m not running Al Baydha Project’s media anymore, although I have one more video to make that will incorporate film that I did last week. It was my first visit in Saudi Arabia in a year and a half and my first visit there seeing what it was like after rain since we cut irrigation in 2016. It was a phenomenal experience.
Gregory: Amazing. I’m excited to see.
Neal: It’s something else when you see bird nests and wild bees swarming in trees that you’ve planted in a place where trees aren’t supposed to be able to grow. That’s something else.
Gregory: Amen. Did you ever see that little animated version of The Man Who Planted Trees?
Neal: Yes, I have. I cry every time I watch it.
Gregory: Yes, me too.
Neal: It’s beautiful. I appreciate this, Greg. It’s been very fun.
Gregory: Yes, have a beautiful evening.
Neal: I hope your podcast blossoms ad that you get thousands and thousands of listeners, because the message you’re putting out is an important one.
Gregory: Thank you so much. Thanks for being a part of it.
Neal: You bet. My pleasure.
